Here are a couple of market-correction milestones: Yesterday, the S&P 500 finally recouped a little more than half of its January 26–February 9 decline. JPMorgan Chase (JPM) recaptured half of its January 29 – February 5 correction by February 9, and as of yesterday, it had reclaimed more than 80% of it.

Meanwhile, computer networking and communications company Cisco Systems (CSCO), which was already coming close to erasing its downturn two days ago, shot above its pre-correction high yesterday on the back of strong Q4 numbers, gapping above Wednesday’s high and trading up more than 6% intraday (to $45.13). So much for that correction.

Source: OptionsHouse

Cisco beat on both headline earnings and revenue numbers, and received some loftier price targets, to boot: $50 from Oppenheimer1 and $55 from Deutsche Bank.2 Checking recent sector performance shows that Tech has regained its market dominance: The S&P 500 Information Technology sector was up more than 7% over the past five days, and Communications Equipment (yes, thanks in large part to CSCO) was up more than 11%.

Options traders also jumped on board with gusto—CSCO contracts were among the most active on the day, with call options (giving the owner the right to buy) volume outpacing put options (giving the owner the right to sell) volume by more than three to one.

Yeah, the Street liked the numbers and the outlook, which included a 14% increase in the stock’s dividend, coupled with authorization to buy back $25 billion in CSCO shares.3

The weekly chart below shows the stock trading at its highest level since late 2000, and—speaking of recovering from sell-offs—very close to the 50% retracement level of its 2000-2002 decline.

Source: OptionsHouse

All this being said, seasoned traders know not to chase supernova momentum. As strong as Cisco’s numbers were—and as enthusiastic as the Street’s initial reaction to them was—short-term traders will try to position themselves for possible counter-reactions to outsized price moves. In this case, CSCO already showed some evidence of cooling its jets by spending most of yesterday well off its intraday high (although still up more than 3%).

After other days that CSCO made at least a five-day high, traded at least 3% above the previous days’ high, and closed up at least 1.5%, the stock tended to have choppy, somewhat bearish price action over the next several days: Three days after the up day, for example, the stock was lower more than half the time (something that could possibly tie into a test of the breakout or gap level).

In other words, for disciplined traders, there are potential opportunities on both sides of the market.

A holiday heads up: Next week will be shortened by Presidents Day on Monday—US equity markets will be closed, but most US financial futures contracts (stock indexes, interest rates, currencies) will trade until noon CT/1 p.m. ET.

Over the past 25 years (1993-2017) there’s been a tendency for the market to exhibit some weakness on the Wednesday and Thursday after the holiday: The S&P 500 (SPX) closed down 15 of 25 times on Wednesday and 17 of 25 times on Thursday. Since 2008, Wednesday was down seven of 10 times and Thursday was down six of 10 times. But the Friday before Presidents Day (today) and the Tuesday after it have been more bullish over the past decade, with both days closing higher seven years out of 10.

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